Belgian tax rules are illegal state aid

The European Commission will force Belgium to claw back about €700 million from at least 35 multinational companies, claiming the country’s tax rules amounted to illegal state aid and hurt smaller peers.

The Commission did not name the companies but said more than half were European and their share was €500 million of the total unpaid taxes. The Belgian government has two months to submit a plan for how it will recoup the money.

“It distorts competition on the merits by putting smaller competitors who are not multinational on an unequal footing,” said Margrethe Vestager, European commissioner for competition.

Anheuser-Busch InBev, the world’s largest brewer, confirmed it is one of the companies and said it will consider its options, “taking into account the reactions by the Belgian authorities.”

Other companies involved include Belgacom, telecommunications company now known as Proximus; oil giant BP; BASF, the German chemicals company; Atlas Copco, a Swedish maker of industrial tools; Celio, a French fashion business; and Wabco, an American company involved in vehicle technologies, according to the Financial Times.

The charges extend a sprawling Commission inquiry into European corporate taxes. The Commission suspects some countries used confidential deals to hand out illegal state aid in order to lure companies.

The Commission is still investigating tax rulings struck between Apple and Ireland and Amazon and Luxembourg.

“I have found that this job of mine takes a patience of steel,” Vestager said. “Sometimes you think a case is on track and you can foresee a decision, and then something happens … We will announce a decision when we are ready, and we cannot tell you anything about the timing of that.”

The Commission, which opened the probe into Belgium’s taxes last February, said the system allowed a few dozen multinationals to enjoy discounts of 50 percent to 90 percent on their taxes because they didn’t have to pay taxes on so-called excess profits.

The rules work like this: Belgian authorities assume a multinational company makes extra profit because of their global advantages. The companies, however, were taxed on what a hypothetical, domestic rival would have made. The multinationals paid no taxes in any country on the excess profits.

The Belgian Finance Ministry said the decision was expected and “we are not excluding any options, including challenging the decision.”

The tax system was designed by Didier Reynders, Belgium’s current foreign affairs minister, who was budget minister between 2004 and 2011. He did not respond to a request for comment.

The system was implemented under Guy Verhofstadt, prime minister between 1999 to 2008. Verhofstadt, now a member of the European Parliament, declined to comment.

Asked if there are still tax havens in Europe, Vestager said, “I don’t really know what a tax haven is. To me a tax haven is where everyone pays their fair share.”